Federal Maritime Commission escalates monitoring of global shipping alliances

Federal Maritime Commission escalates monitoring of global shipping alliances
Alliance practices are already being investiated at several US ports

The Federal Maritime Commission (FMC) has issued letters to the three global carrier alliances requiring that certain carrier-specific trade data currently filed with the Commission quarterly, must now be submitted on a monthly basis.

Shippers have recently complained about the lack of export container availability and considerably high freight rates on trans-Pacific trades, while the FMC has already begun investigating alliance practices in the ports of Long Beach, Los Angeles, New York and New Jersey.

FMC Chairman Michael Khouri stated: “If we detect any indication of carrier behaviour that may violate the Shipping Act’s section 6(g) competition standard, we will immediately seek to address these concerns with direct carrier discussions.

“If necessary, the FMC will go to federal court to seek an injunction to enjoin further operation of the alliance agreement.”

The Commission’s Bureau of Trade Analysis (BTA) has determined that given recent fluctuations in the markets, it needs to receive key trade data directly from alliance carriers on a more frequent basis.

This will help it to better position staff economists to timely evaluate changes in the trans-Pacific and trans-Atlantic trades and report findings to the Commission.

The BTA has traditionally relied on a combination of individual vessel operator confidentially provided data and information from commercially available industry data to monitor and analyse container carrier freight rates and service market trends.

The Commission noted that the three major carrier alliances – 2M, the Ocean Alliance and THE Alliance – are the top priority and receive highest scrutiny.

These three agreements have the greatest potential to cause or facilitate adverse market effects based on the agreement’s authority and geographic scope in combination with underlying market conditions, it pointed out.

On an ongoing basis, the FMC monitors key economic indicators and changes to underlying market conditions for all global alliance agreements to detect any joint activity by agreement members that might raise and maintain freight rates above competitive levels, or unreasonably decrease services.

Last week, the FMC approved a supplemental order to investigate ocean carriers operating in alliances and calling the Port of Long Beach, the Port of Los Angeles, or the Port of New York and New Jersey.

The expanded Commission investigation will seek to determine if the policies and practices of those shipping companies related to detention and demurrage, container return, and container availability for U.S. export cargoes violate 46 U.S.C. 41102(c).

The designated fact finding officer Commissioner Rebecca F. Dye stated: “The time has come to resolve the most serious impediments to port performance.

“The order emphasises I, as fact finding officer, have all enforcement options at my disposal to address the crisis that exists in our major port gateways.”

The regulator is worried that certain practices of ocean carriers and their marine terminals may be amplifying the negative effect of bottlenecks at these ports and may be contrary to provisions in the Shipping Act of 1984.

The potentially unreasonable practices of carriers and marine terminals regarding container return, export containers, and demurrage and detention charges in above ports present a serious risk to the ability of the US to handle trade growth.

Dye added: “Removing the obstacles to port performance allows ocean carriers, ports and marine terminals, drayage truckers, American importers and exporters, and every other business engaged in freight delivery to grow and prosper.”